Javier Gonzales is the manager of the Repairs and Maintenance Department of JG Industries. He is responsible for preparing his department's annual budget. Most managers in the company inflate their budget numbers by at least 10 percent because their bonuses depend upon how much below budget their departments operate. Gonzales turned in the following information for his department's budget for next year to the company's budget committee:

a Budget This Year Actual This Year Budget Next Year
Supplies $20,000 $16,000 $24,000
Labor 80,000 82,000 96,000
Utilities 8,500 8,000 10,200
Tools 12,500 9,000 15,000
Hand-carried equipment 25,000 16,400 30,000
Cleaning materials 4,600 4,200 5,520
Miscellaneous 2,000 2,100 2,400
Totals $152,600 $137,700 $183,120

Because the figures for next year are 20 percent above those in this year's budget, the budget committee problemed them. Gonzales defended them by saying that he expects a significant increase in activity in his department next year.

What do you think are the real reasons for the increase in the budgeted amounts? What ethical considerations enter into this situation?